One of the most important yet overlooked financial planning products is life insurance. Life insurance often serves as the cornerstone of any insurance plan. Most financial advisers consider life insurance important because it provides many income replacement, debt repayment and estate planning options for your family. Without life insurance, your death could cause a financial catastrophe for your heirs.
Identification
The main reason to purchase life insurance is to protect your family after your death. Particularly if you are a working spouse with children, life insurance will protect your loved ones by enabling them to continue paying off your mortgage, and covering school tuition, electricity and grocery bills if you suddenly pass away. In the event that you die, life insurance will enable your family members to carry on their present lifestyles without too much interruption. Life insurance can also cover your burial expenses upon death, which can add up to thousands of dollars in itself.
Benefits
If you decide to buy an investment type of life insurance (referred to as whole life insurance policy), part of the premium will go into an account that is accessible later, even if you do not die first. Whole life insurance policy can be used as an instrument of savings to help you accumulate significant wealth or to use in an emergency situation, like the event of a serious illness or injury. If you invest in life insurance early, even though you may not have real beneficiaries, you can build up value for yourself.
Features
Life insurance enables you to protect your home, business, boat or any other asset you have a tax bill or outstanding loan on. This prevents your family members or other beneficiaries from the burden of having to sell your property because they are unable to continue paying for it.
Significance
People who invest in life insurance can also leave a legacy behind them by donating the proceeds of your insurance policy to a particular organization or school you have a strong affinity for. Most states enable such organization to receive the funds tax-free. You might also be able to write off the insurance premiums from your own taxes.
Considerations
It is important to carefully select your life insurance policy. Talk to several life insurance agents to compare different plans before you decide to purchase one, as features and pricing can vary a great deal. It is also important to ensure that the person you speak to is a licensed insurance agent who can provide you the best policy for the specific situation you are seeking to be covered for.
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